Euro-Asia net profit growth slows dramatically at interim

PUBLISHED : Friday, 13 September, 2002, 12:00am
UPDATED : Friday, 13 September, 2002, 12:00am

Main board-listed Euro-Asia Agricultural (Holdings), in the spotlight in recent months over corporate governance concerns, yesterday unveiled drastically slower interim net profit growth.

The Shenyang-based agricultural firm, controlled by China's second-richest man Yang Bin and a one-time darling of international institutional investors, booked a 7 per cent year-on-year rise in unaudited profit attributable to shareholders to 262.2 million yuan (about HK$245.68 million) in the first half.

Euro-Asia reported a net profit of 290.6 million yuan to the Hong Kong Stock Exchange, giving it 8.6 per cent growth over a year earlier.

The higher figure did not account for fund allocation to a statutory reserve required by mainland accounting standards, said Rex Chiu Wing-chor, vice-president for corporate planning and development.

Both figures, however, pale in comparison with the stunning 146 per cent net profit surge a year earlier even before a 23 per cent upward revision in profit due to a major retrospective agricultural tax cut.

'We hope to maintain a double-digit bottom-line growth for the whole year,' said Mr Chiu, before conceding: 'I would be very happy already to see growth of 20 per cent (over last year).'

Euro-Asia's net profit soared 173 per cent for all of last year.

The company's board nevertheless recommended an interim dividend of 2 cents.

The firm's share price closed up 7.79 per cent at 83 HK cents yesterday, down 70 per cent from the 52-week high of HK$2.80.

The company's stock has taken a battering from concerns such as the fear Mr Yang might use the listed vehicle to subsidise his cash-strapped private property and tourism operations in Shenyang.

Thinning profit margin was to a large extent blamed for the slowdown in Euro-Asia's net profit growth.

The shift in product mix towards lower-margin flowers and vegetables pared the firm's overall gross profit margin by 13 percentage points to 39 per cent in the first half.

Turnover, however, surged 57 per cent year on year to 795.9 million yuan in the first half, faster than the 52 per cent a year ago.